Good morning, everyone, and welcome to this information meeting with Fragbite Group. My name is Erika Mattsson. I am the Chief Communications Officer, and today I have Stefan Tengvall, our CEO, and Abrial Da Costa, CEO of Playdigious, presenting with us today. Handing over to you, Stefan.
Good day, everyone. Thank you for joining us on this information call. Just gonna make this slide go bigger, and this information report or information meeting on the interim report for the second quarter. We've received some questions that we will address prior to the meeting, but also feel free to ask any questions in the chat, and we will try to answer them as well. Today with me in this meeting, we have the CEO of Playdigious, Abrial Da Costa. He will be presenting Playdigious. Myself, Stefan Tengvall, acting CEO, and Erika Mattsson, Chief Communications Officer.
So let's jump into just quickly report, recap on what we're doing or the ones that follow us on a regular basis, you already know this, but our core competence is of course developing and publishing games, and also creating e-sport content for traditional and modern platforms. We utilize our expertise in gaming, e-sport, and Web3, and we do this by targeting the new generation of gamers that wants to play, watch, but also own their utilities in the game. And we do this as a group with a lot of, or a few companies in the group. So we do it with Fragbite AB in Stockholm, FunRock and Prey in Stockholm as well, and we have operations in the Netherlands with Web3, operations in Lucky Kat and WAGMI.
course, Abrial Da Costa is representing Playdigious out of France and Paris. When it comes to the Q2 report, highlights and significant events, just as a recap for the ones that already, of course, read the report, we updated our guidance from Playdigious when it comes to our extensive pipeline of estimates of 11 games that will generate between 10 and 17 million EUR from launch and onwards the coming three years, which was an up guidance from the last time, 6 to 14 million EUR. So quite significant uptick on the guidance. We also, and Abrial will talk more about this, we successfully released Loop Hero, which also received 1 million downloads quite rapidly. We started or initiated our Koban marketing campaign, which took off, and we continuously work on this campaign.
As you saw also on the press release this morning, we signed a very promising agreement with DAO Maker. When it comes to the esports business area, it continues on its trajectory in being profitable. And also happy to announce or actually comment on the fact that FunRock Prey they signed one work-for-hire project, which is about approximately 15% of the total turnover in this group. And this turned the group profitable from July and onwards, which is happy to say that. And then we mean profitable on a cash EBITDA, not only EBITDA, but also cash EBITDA.
The ones that follow us also saw that we press released our restructuring program, where we made some significant cost reductions as a total of, in full effect, from July this year, twenty twenty-four, we have 950,000 SEK per month in reduced cost, both on growth level, on group level, but also in some of the subsidiaries. I will comment on that a little bit later on one more slide or one specific slide. One of the significant events during the Q2 quarter was, of course, the Fall Damage bankruptcy, and also the switch of management, myself stepping in as the CEO. We also initiate the rights issue, which was concluded during the third quarter or mid-July.
Diving into the financials of the second quarter, we have. So the left hand of the table, I hope you can see my pointer, is the second quarter. So when it comes to net revenue, and that is the revenue excluding active capitalized work, was 41.4 million SEK. E-sport turnover, 3 million, and Web3 turnover 5.5, which gives the group a revenue of close to 50 million. That's a reduction compared to last year of about 10 million. This reduction is explained by the fact that we sold our two hyper-casual games in Lucky Kat, in Q2 last year.
So we don't have these revenues of about SEK 10 million for this for the second quarter this year. Where it's actually more than SEK 10 million, it was SEK 40 million. So the remaining entities left in the group now, they grew the revenues, but Lucky Kat reduced their revenues to SEK 40 million. When we look at the adjusted EBITDA, we report 2.8 in the gaming segment, Esports 0.4%. Unfortunately, Web3 was negative with 0.9, and parent company 3.5. And you need to bear in mind when it comes to the parent company, all the cost reductions has not been implemented during the Q2, so we see lower cost level in parent going forward. But that gave us a total adjusted EBITDA negative SEK 1.1 million.
Going forward, we see, of course, work very intensively for the group to be profitable, and that's also what I expect, going forward. When it comes to the adjusted EBITDA, we adjusted for SEK 5.5 million due to the Fall Damage bankruptcy, which was SEK 3.7 million, and restructuring cost was SEK 1.8 million. So in total, adjusted adjustments in the adjusted EBITDA was SEK 5.5 million. Let's. If we look at the reported profit and loss, about, we already spoke about the 50 million in net turnover. We have a capitalized work during the quarter, in the reported quarter of SEK 15.3 million.
Bear in mind, about 10 million of this 50 million was related to Fall Damage, which is no longer part of the group. And also, if you compare to, if you compare. So, that gives us a total revenue for the quarter of SEK 65.2 million. As you already or as you also know, this report was according to the K3 reporting standard. So we had to do the amortization of goodwill, which was SEK 32.2 million, which gives us EBIT of SEK 41.6 million in the second quarter.
Also worth mentioning, one of the big events, which was the net financial items in Q2, which also include the write-off of the provision for the earn-out to the sellers of Lucky Kat, which had then a positive effect of SEK 37.7 million, positive net effect, which is a reduction of provisions, or we will not pay this in the future. I think it's, I mean, prudent, since we had some major events during the quarter where Fall Damage was put into bankruptcy. I think it's applicable or relevant to show the profit loss in pro forma, i.e., excluding Fall Damage. And then I will comment on the big adjustments here.
This is for the first half year, so from January to June. Fall Damage has had capitalized work of SEK 25.1 million. This is then adjusted for, which gives the current group, as it stands today, total capitalized work of SEK 13.7 million. And that gives us then a total pro forma revenue of SEK 120 million for the first half year. Other adjustments worth commenting on is that the personnel expenses in Fall Damage was SEK 17.6 million. We adjust for that, and when adjusted. So when we don't, we, if Fall Damage wouldn't have been part of the group, we would have had 17.6 less personnel cost. That's why it's positive. And then we also adjust for other external expenses, 14.6 million.
So that gives us an adjusted EBITDA for the first half year of SEK 4.4 million, when we adjust for the fact that Fall Damage would not have been part of the group for the entire first half. Other big adjustments we're commenting on in the group adjustments is amortization of goodwill. Goodwill amortizations related to Fall Damage, the first half year was SEK 32.5 million, and that gives us, as a group, pro forma of goodwill amortizations of SEK 41.3 million, adjusting for this. And then we also had the adjustments of net financial items of fifteen point two million.
That gives the group pro forma 35.0 million SEK in net financial items, and a net profit on the first half year pro forma of 13.4 million. If we look at the balance sheet, we also, of course, there are some big movements in the balance sheet due to the bankruptcy of Fall Damage. I tried to comment it here. The first, I mean, big adjustment or big change is intangible assets, where, at the end of the last year, intangible assets was 920 million SEK. Now, at the end of June, it's reduced to 201 million. And this is two major adjustments due to the bankruptcy of Fall Damage.
So it's the book value of the IP, three hundred and seven million SEK, and also the book value of the goodwill, on a group level, three hundred and sixty-eight million. So that's the reduction, the main part of the reduction of intangible assets from nine hundred and twenty to two hundred and one million. Other big changes in the balance sheet worth commenting on is the provision that reduced to thirteen. So it goes from six hundred and seventy-eight point three million to thirteen point seven million, and this includes, first of all, the elimination of the recoup to the sellers of Fall Damage. Since Fall Damage went bankrupt, we don't have to pay this recoup anymore, so it's written off.
Also, there was an earn-out to the sellers of Fall Damage, i.e., the founders of Fall Damage, of 400 million SEK, which is also cleared out in this balance sheet or during Q2, when Fall Damage went bankrupt. Total outstanding provisions, end of June, is 13.7 million SEK. It's a big change. The final remaining earn-out for the acquisition of Lucky Kat was also determined to zero, and this had a net effect on the provisions that have been reduced with 37.7 million SEK. If we look at the so we also made some amortization on credit liabilities to credit institutions, mainly Nordea. During the quarter, we have some other financial liabilities, which was short-term liabilities of 41.2 million SEK.
This was repaid after the second quarter when we closed the rights issue. Good. Then we look at the cash flow for the period. So the cash flow from operating activities before changes in working capital was negative SEK 8.7 million. Then we had a small positive effect from working capital in the quarter of SEK 2.8 million. That gives us a cash flow from operating activities of negative SEK 6 million. But then I think we also should comment on the cash flow from investing activities. Cash flow from investing activities was negative SEK 15.4 million.
Out of this 15.4 million, about 10 million was activated work in Fall Damage, which is no longer with us, and we will not continue to spend money or invest in the Fall Damage IP. So going forward, we wouldn't have this additional 10 million on negative cash flow from investing activities. And adjusting for that 10 million during the Q2, we would have a positive cash flow of 2.4 million instead of negative 7.4 million. And also during the period, we amortized 17.1 million on other liabilities to credit institutions. During the period, as a comment here, we raised a short-term bridge loan of 20 million SEK, and this was repaid, as I already mentioned, in mid-June, when we closed the rights issue.
That's no longer part of the balance sheet any longer, but shows as a positive effect here for financing activities during the second quarter. We received one question on the cost reduction program, and as I already mentioned, the purpose was to increase the company efficiency. It's ongoing, but we reduced the cost that we see we can manage right now, or that we think is right to take right now. We reduced capital expenditure, and we also. And the aim was, of course, to secure a stronger cash flow, both short term, but also long term. And as already mentioned, the total savings was about SEK 0.95 million per month, totaling to SEK 11 million on an annual basis.
Out of this, SEK 0.95 million per month, about half is related to cost on a group level. I think this is a continuous work going forward, and to make sure that we are a streamlined and slim organization. But it's when it comes to the group company, it's very much up to the CEOs to make sure that every entity is profitable and generates cash to the group. So let's hand over to Playdigious, and Abrial. Welcome. You need to unmute. We can-
Okay, I think it's working now. Thank you, Stefan. Thank you for the presentation. Bonjour, everyone. My name is Abrial Da Costa. I'm the CEO of Playdigious for about a year now. Let's move to the next slide, because for those of you, our new shareholder in Fragbite Group, I want to start by giving a quick overview of Playdigious' activities. In twenty twenty-five, the company will celebrate its tenth anniversary. We are based in France, offices in Paris, Montpellier, and Nancy, and we are 35 employees. We have two business verticals. We have the porting and the publishing. The porting is our main business. We license IP of already released and commercially successful PC and console games. We adapt them to mobile and publish them. These games are premium or free-to-try business model. I will explain after.
Our revenue is generated from unit sales in main app stores, as well in third-party app stores, such as Gameloft, Samsung, or telco operators. Also, some of our games are available on subscription platforms such as Netflix Games, Apple Arcade, or Google Play Pass, and we share the revenue with the IP owner. So for the publishing and the new IP of publishing, this is our newest publishing business vertical announced last year. It's called Playdigious Original. So for this one, we partner with independent studio and publish them to PC and console. So as publisher, we have a share in the total revenue generated from games, whether through unit sales, distribution partnerships on every channels. So Playdigious has a long track record of top-line growth, more than nine years, and the porting business vertical has shown consistent profitability in twenty nineteen.
I can say that after almost ten years, I'm proud that Playdigious is now an international established brand and recognized as one of the best company to port existing PC and console IP to mobile. The investment that made into the company for the past two years has allowed us to sign even more bigger IP, so we continue to grow and expect to keep increasing our space in twenty-five. Our growth is fueled firstly by the release of new games, but also through expanding the distribution of our back catalog. You know, the back catalog is a key step here when we expand the financial lifetime to increase our margin, especially in China and future third-party app store. About our strategy, I want to take the opportunity to talk about the Playdigious strategy, how we work, and what kind of games we focus on.
We look for IP that will show commercial success on PC and mobile, or PC and console, sorry. These are titles that shown impressive sales and been profitable for the IP owner already, and thus we know there is a player base out there on mobile. We select the IP very carefully by paying close attention to critical reviews, award nomination, player feedbacks, and metrics, like player ratings on Steam, for instance. Then we can start a technical evaluation to make sure that the IP can be ported on mobile while respecting the technical constraints for the devices and the App Store. If we have the green light from our technical team, then we can start working on PNL. We evaluate our cost, sales forecast, and revenue.
During the production, we put a lot of effort in accessibility, testing, and QA to get the best rating on App Stores. We have excellent relationship with Apple and Google. All our games are always featured in the store at every launch, and in the end, what make us successful and different is that players should have the same gaming experience on mobile that they will have on PC and console. Our reputation speaks for us, and we prefer to focus really on quality over quantity, to make sure that every title we release has the best day one as possible. For the publishing vertical, we select original project that have a market fit and potential revenues, growth in every distribution channel.
As this is our newest vertical business for the company, the originals, we have limited our investment to Triple-I. It's a very small indie project. First project, Linkito, was released last month, and two new Playdigious Original games are planned for 2025. Also, if you look, if we look at the second quarter, so these are the main highlight of the period. We signed a number of new deals in both Q1 and Q2, resulting in updated pipeline estimates in April, which I will talk more about it in a bit. We released two strong titles to mobile, Loop Hero and Skul in May, and Loop Hero was. What we did is that we implemented a trial version with the free-to-try business model that we have only tested twice in the past.
This strategy is part of this way, this title has performed above expectation, with more than one million downloads, and it's still growing. Now, after many KPI evaluation with Apple and Google, we have decided to launch more games on the free-to-try model. One year ago we announced the new publishing business with the label of Originals. The first title under this label was released end of July. It's called Linkito, which was an important milestone for the company. Since Linkito is very small game, that was more than 70% finalized when we signed it.
It allow us to test our new business model in the smaller scale, sorry, with our publishing, marketing, QA, so all the team of the company to see if we can go manage to have more project in the future, so what we did is that we managed to get the game also in a number of successful promotional events, like PAX in Boston, the Future Games Show event in June, including just recently at Gamescom, so and we get very solid feedbacks. All in all, we can say that we are satisfied with Linkito release, even if it's a small game, it's a mini-game, but we will carry over learnings from this release to upcoming releases of Fretless and Crown Gambit for next year, so that was a lot of information. Thanks for your attention on this slide.
Let's move to the next slide, please. So this is an overview of our portfolio with over 20 great IP already produced since the company was founded. Dead Cells, it's still our best seller, is still continuing to perform very well, especially in China, while also Northgard, Little Nightmares from our back catalog continue to sell well, too. We know that two more title, more new titles will coming next year, including the two original labels. So there is Fretless and Crown Gambit, that we'll talk about them on our next slide. So we can move on the next slide on this one. So yeah, for the pipeline. So let's have a look on the pipeline, starting with our publishing business. So as I mentioned, we have the two games, so Fretless and Crown Gambit. Very good feedback from Gamescom as well on both one.
We have also get an award from the best soundtrack during the Gamescom event last month. So everything is coming. It was an intense summer. We have an equally intense fall ahead of us because for both games, we have a lot of marketing activities planned for the coming months, along with the release and updated playable demos on Steam, which now playable demos on Steam is a very big bit, communication bit for the games. It give us a lot of feedbacks and a lot of wish lists. So this game, so Fretless and Crown Gambit are both planned for release in the first half of twenty twenty-five. We didn't set the dates. Now we need to separate them also to take into consideration other games in the pipeline.
We will be able to provide an update in January to see which game will be first and then the other one, the second one. That's now in reflection at the company. Moving to the porting business. First up, we have Children of Morta, which will be released in October 7. Since first release, this game was sold more than one million copies on PC and console, so we are confident that we will find an audience on mobile as well. Ninja Turtles: Shredder's Revenge was already available on Netflix Games, and in July we signed an extension deal with Netflix as a non-exclusive basis, which means that the game will still be available on Netflix Games as a subscription platform.
But also we released the game on the current Apple and Google Play App Store, which will be a relaunch of the game. So we expect a lot, a lot of revenue for this one because it's a big brand, and we know that we can get many good reviews also from the player, because the game was already in the top 10 most played game at Netflix subscription platform. The most exciting announcement was what we did in the past months: the announcement of Don't Starve Together. It's a very big IP exclusively for Netflix. It's a great game that already sold more than 10 million copies on Steam and consoles.
So we are very high expectation on the mobile version for sure. The release date will be confirmed also early next year, because it's a big game, and we're still working on it, and we'll be happy to announce the date soon. Just want to mention something about the pipeline value, as I mentioned earlier, we signed a number of new deals in Q1 and Q2. In April we updated the market on the estimated value of million titles. This means that we are new to our portfolio, either through porting or publishing all these games. Starting in April, when we published the estimate, it was 11 games signed, and these are games planned for release between now and the end of 2025.
So the total estimated revenue, net revenue of this pipeline is between 10-17 million EUR, generating during the first three years after release. So these estimates do not include, of course, revenue generated from expanding the distribution of existing portfolio games. As I mentioned earlier, the back catalog revenue is still stable, it's still going to continue to grow, so it's very key to generated revenue for the future of the company. So what we do, we do it in two ways. So we do platform expansion, when this is when we take a game for a new distribution platform, like Dead Cells, that we put it from the store, the current store, to Netflix or Apple Arcade or soon the Epic Games mobile store will be launched as a third-party app store, which is new.
You know, Epic Games, as a huge success with Fortnite, they launched their mobile store on PC two years ago. They tried to compete with Steam, which is very difficult, but they have almost 30% of the market right now. With the change of the regulation in EU, for the App Store, so Apple opened the door for third-party like Epic. Epic is coming back soon, with Fortnite and with live service games. They announced that they will open the store to third-party publisher in December and early next year. We are already working with them closely to choose the right games to be launched in December.
Yeah, it will be a great announcement to do also when we'll be one of the first publishers to be on the new App Store. So platform expansion and market expansion, this is where we take a game to a new market. It can mean, for instance, adding other language to the game so that we can launch to a targeted campaign in new countries. A good example is that when we add Spanish to Dead Cells, and we carried out a marketing campaign in Central and South America, so really focus locally with a new localization and to target a new audience in other territories or continents. But the most important market for sure is China, where games need to through an application, the ISBN process, which take at least a year.
The timeframe can varies on a case-to-case basis. To date, we have already released Evoland 2, Dead Cells, and Legend of Keepers. Since now two years, we currently have a number of pending application, and we are in the process to sign new games from our upcoming lineup. Yes, China is key also to expand, and when we see the result on Dead Cells, we know that we have a big activity there. This is the biggest expansion for market for us in the future. I know that there was a lot of information also on this slide. I would like to thank you for your attention. It's all for me. I will stay on the call and answer your question during the Q&A, of course, and for now, I will hand over to Erika.
Merci beaucoup, Abrial. That was great. As you... Some of you may have noticed, we had a press release this morning regarding our Koban launch, and we will soon also be giving more updates in terms of what the launch process is and our partners and so forth. So we just wanted to take this opportunity to circle back a little bit on what it is that we do in Web3, in Fragbite Group. As a bit of a reminder, we also know that that is quite complex, so we're just gonna have a quick brief review of that before we move on to questions. Next slide, please. Yeah, we can just... That's, yeah, thank you.
What's key to understand about our Web3 business, which we carry out through our subsidiaries, Lucky Kat and WAGMI, is that the core of it is gaming. The core is game development. That is what we're doing. So what we do is we develop games in the free-to-play, revenue category. So these are games that are available on PC and mobile. We have a game experience first focus. So what that means is that the key is still the basic things that we need from a game. It needs to be commercially viable, attractive, and interesting, so that it can carry its audience. What we then do with Web3 is that we add a technical layer on top of this, which gives us various opportunities to do more with the game.
Our games are on, for instance, Apple App Store and Google Play Store, so we can have regular monetization strategies with them. We can also have sort of a classic, you can play them as a regular game. But then we have that added layer of the blockchain technology on top of that. And I would say there are three benefits to doing this. First of all, we add revenue streams to the games. In a regular game, you can have in-app purchases, you can sell equipment, such as a shield or an avatar and such. Those are obviously targeted towards the people who play the game.
In our Web3 games, those are, of course, still our primary target groups, but when we make this equipment or these assets, when we make them digital assets with the help of blockchain technology, they also have an external value, which means that we also attract investors who are interested in gaming-led investments. So they may not be actually playing our games, but they're interested in that type of investment. So that means that we can have a wider range of people that we target. We also get transaction fees from when these assets are traded, which is another added benefit. And finally, we have been able to to finance the development of our games through these digital assets, which has been very helpful, and it also speeds things up in many ways. The second benefit is that we give power back to the gamers.
We give them ownership. This is something that we know that the new generation of gamers care very deeply about. To them, playing games, gaming is very personal. What they create is something that they care much about, so they want a financial stake, and they also want a creative stake in what they do. When they have digital assets that they own, that no one can take away from them because they're secured by the blockchain, that means that they have that security, and they have the ownership. And this is something that we see that more and more gamers ask for. Finally, in the end, that's supposed to be three, the third benefit is engagement strategies. When you have a free-to-play game, it's key to, of course, engage your players, first of all, and then you want player retention, and you need in-app purchases.
Then you have various kinds of engagement strategies to make sure that they stay. You can, of course, do user acquisition. You can have a more organic engagement through social media and so forth. But with Web3, we're given a whole new palette of activities that we can do because people can own their NFTs and their tokens and so forth. So that gives us an added edge. When we talk about digital assets, that can be quite complex sometimes. In our case, it's specifically two kinds of assets. The first are the NFTs. These are non-fungible tokens or smart contracts, if you will. If you take something from a game, again, like an avatar or a piece of equipment, a shield, or a house, or something like that, that is then translated into a digital asset that the player holds. They can trade it. They can sell it.
They can sell it outside of the game, and no one can take it away from them. Until now, we have carried out NFT sales to a value of about 12.3 million SEK, and these avatars are now out in the market, and they're traded, and whenever they are traded, we also get transaction fees. Finally, and this is sort of the hero of the hour, currently, we're very excited about the imminent Koban launch. We have our tokens, and tokens are more a type of currency. So these are currency that you can use inside the game to make purchases, but they're also an interesting investment opportunity, again, for those who wanna look at gaming-led investments. We haven't launched our tokens publicly yet, so up until this point, you can look at it as a share option, for instance.
There are a number of share options out there, and when we launch, they will be turned into shares. Until now, we've had some private sales to a total amount of about 38 million SEK, which, again, has been incredibly important for the development of the games. This has financed the development of these games. And what we're now working towards is the launch, the public launch of Koban, and we will soon be informing you a bit more about the various steps. As we previously announced, the marketing campaign has started, and I think many of you have probably followed it online. If you don't, I suggest you follow Lucky Kat in social media because then you can keep up with all of the activities.
This morning, we were happy to announce that we have partnered with the global leading launchpad called DAO Maker. We will be adding other launchpads as well to the mix. This is a deal that we really wanted to make, and we're extremely happy that we were able to announce it this morning. To give you a bit of reference, they accept less than 1% of all the projects that are offered to them, so they are extremely popular. They have a fantastic track record in selling out the collections that they are offering and also over-subscribing them, so we're very happy to be partnering with them. The next step is that we will be adding more launchpads.
We will soon be announcing which exchanges that we're gonna be working on, and in parallel, our Lucky Kat team are working around the clock in the marketing campaign. They will actually be attending a event this week in Korea. They're also going to Singapore and having a number of different activities inside the game, and again, we will be updating you about this in the near future. And I know we also have a couple of questions regarding this at the end. So that was a bit of a quick recap on what it is that we do. Stay tuned for more on the Koban launch. Next slide, please. Stefan, over to you. I think you've muted yourself. Hold on. Let's see.
Thank you. I'm not allowed to unmute-
Oh
... myself.
It has a life of its own. Back to you, Stefan.
Okay, so let's see. Let's. So the next step here going forward, and also what we're working on now in Q3 and Q4 for the end of the year. As Abrial already mentioned, we're working very hard on continued expansion for porting and publishing deals. Team is doing really well and had a lot of activities on Gamescom in Cologne. We foresee another nine to 11 games released by 2025. We also see the esport agency business growing. Already mentioned, esport operations are still small, but profitable, and that's what we foresee for the future. Erika already talked about the exciting news and work we're doing with Koban token publish sales. Working very hard, and that's also a very important project for us going ahead.
We're expanding the Koban ecosystem with more games and titles, and also and part of that is, of course, looking through our traditional Web2 IPs, and how to turn them or transform them to Web3 games. And also, as a final point, we continue on group level and then working on group level efficiency and strategic development, within the group. So that's an ongoing work that we of course do on a day-to-day business. That was the slides we prepared, so we received a few questions ahead that we also address now. If you have further comments, you can write in the chat, and we will try to address them as well. So going through the first question, when it comes to Linkito, it seems a very niche game.
How did the release go? And I ask you, Abrial, if you can answer that, because you're the expert.
Yes, thank you, Stefan. Yes, Linkito, yes, it's a niche game for sure, I confirm. The launch has gone well. Indeed, it's we are low in our forecast range, but we are very satisfied by the feedback from the players and the press. We know that in this niche of game, puzzle games, there is stable sales. Of course, we are preparing the life cycle on Steam, so we know that it will sell over time. So for us, as I mentioned, Linkito was very a strategic launch for originals. When we signed the project, it was already done. It was around 70% done. We just put 30% straight finance for small games, so it was not a big investment. We are...
So, it was important to see that the team were able to show their potential, to build the future games on the original label. So this small game was just a first attempt for them to learn more. So as I mentioned, it's a limited investment that will be repaid by the end of 2025. So that's the reason for Linkito.
Thank you, Abrial. And the second question is for you as well. So Crown Gambit comes from a studio that does not appear to have much experience. Why did you choose that title?
Yes
... and what are your expectations?
Yes, Crown Gambit is our next title we sign. We know that for this game and this particular genre, it mixed tactical narrative with a dark fantasy, like a Game of Thrones stuff. So, it definitely have a broader audience than Linkito, for sure. We just announced the game at Gamescom two weeks ago. The numbers for the moment is still growing. We are waiting for the feedback from the journalists because we see many, many journalists during the Gamescom in closed door, so they can play already a good, long, one-hour demo of the game, and we are very, very good feedback.
Even if you can see, I know that you can go through some KPI site, website, but you could make some research also on X, on other social platform, that we have already had positive feedback. For us now, we are working on the next big, very big bit of communication, which is the demo on Steam. Now, we have a very strong demo, and you see with the journalists we saw just two weeks ago, that we have a very big potential. Yes, we are confident, even if well, with the game, it's a company that will be their second game, but our first game was also a small game that they just start to build a new team for Crown Gambit.
So we are confident they will deliver, and we'll be happy to announce our release date early next year. So definitely it will arrive for the first half of 2025.
Thank you. And then we received a question: What is the current status of the cost reduction program? What remains? I think we answered this in the presentation. So on an annual basis, cost was reduced with eleven million SEK. I don't see currently much more cost to reduce, unless FunRock and Prey, for example, is not successful in signing more work-for-hire deals, which they are pitching in current status. So that's with the cost-reduction program. Question number four, in FunRock and Prey Studios, how large is the work-for-hire project in relation to MMA Manager? I think I answered that. So it's two parts of the work-for-hire deal, so it's a fee or remuneration for the work we do, but then it's a retaining revenue per month once the game is launched.
So two parts, but about 15% of the total revenues in that subsidiary. Will you continue work on ALARA Prime in any form, or do you have any plans or other assets of Fall Damage? The group, since the bankruptcy of Fall Damage, we don't have any assets of Fall Damage. We, I mean, the biggest, I mean, clear potential synergy was within the esports operations, and I would say we don't have any plans right now. But we, of course, have a good relationship with the founding team in that sense. It depends on the new owners of ALARA Prime, whether we will work and collaborate with them. But currently, there are no discussions right now on this, so we'll see. But no plans what we foresee right now.
Will you be able to recuperate any funds from Fall Damage? And the answer is yes. So part of the second quarter report, we estimate that we will recoup about 10 million SEK from the bankruptcy trustee. And this estimation is based on the fact that we hold about a little bit more than 50% of the total claims on the bankruptcy trustee. And estimated sales of the IP in Fall Damage is about a little bit more or about 20 million SEK. So that's the reason for this 10 million SEK.
We expect this cash to be injected to the group during the end of the year or beginning of next year, depending on the process of the bankruptcy process needs to be, you know, communicated to Post- och Inrikes Tidningar, and all the creditors need to give proof of their claims and stuff like that. Let's go to the seventh question. When will Fragbite Group be profitable? Which subsidiaries are currently profitable? I mean, that's the overall target of all the work we do on a day-to-day basis, that the group will be profitable from now on and forward, then we have some seasonality change or seasonality effects in different companies in different quarters.
With that said, there could be quarters when one subsidiary is not profitable, but on a sustainable long term, midterm, all subsidiaries should be profitable. What we saw in Q2, Lucky Kat was not profitable for the reason, or one, we sold out the hyper-casual games, or that was the revenue reduction, actually, but we also invested some additional money when it come in preparing for the Koban, Koban launch. Except for that, the other businesses was profitable. What's the current status of cash flow? Will you need another share issue? That's not the plan, that we need another share issue. We work very hard with the Koban launch and the Koban public sales.
You saw that we also, after the second quarter, we concluded the rights issue, which injected SEK 61 million to the business, but net about 10-11 million was injected after repayment of short-term bridge debt, but also fees to the guarantors and advisors. How was the Lucky Kat earn-out affect, how has the Lucky Kat earn-out affected the Fragbite Group finances? So you saw the press release that we've written off the earn-out to zero, but also accounted for a new provision of EUR 325 thousand. So net effect of this write-offs of the earn-out is SEK 37.7 million positive in the financial net for the second quarter. What income will be generated from the Koban release? And I...
Erika, you follow this project and are also heavily involved in the Koban release, so I'll hand over to you to answer this one.
I guess the short answer is, that's not something we can answer, because it will eventually become inside information. At this point, what we have communicated through our tokenomics strategy document is the full supply. I know it's a complex document, so it's hard to get through. We're gonna work on finding ways of making it a little bit more accessible. So we have communicated the supply. Obviously, part of that supply is also the pre-sales that we've done, the private sales, there's team allocation, and so forth. Some of that will be vested over the course of months or years after the full release. So it's a pretty complex setup, which is how this works. What we can say is two things.
One is we expect this income to be significant for the group. The second is that at the point where we set the price, which is impacted on a lot of things, that is the point where we will press release the exact details of the launch, which will then give the market guidance in terms of what we're hoping to generate from the release.
Yeah, and my final comment is that we have ambitious goals when it comes to this Koban release. That was all the questions that we received prior to the meeting. Have we received any questions in the chat as well?
Yes, we have, and I'm gonna start with a question that we got earlier this morning on email. We love how engaged and active a lot of our shareholders are. We really appreciate that. So one of the questions that we got this morning was: "What happens if you can't come to a resolution with the sellers of Lucky Kat? Will that affect how you operate Lucky Kat moving forward?" The sellers have not been active in operations since the beginning of this year, so the conversations that we're having with them in terms of the earn-out does not have any bearing on the operations or anything that happens with Koban. So it is a separate issue in that sense.
We're actively looking for a good resolution and other ways of collaborating in the future, but it does not affect operations currently. Looking at our chat, we have a number of questions, and the first one is for Abrial.
Mm-hmm.
My question is, how many wishlists does Fretless have on Steam?" So how many people have wishlisted the game?
Yes, I'm happy to say that we are close to 50,000 wishlists at this moment, so I expect with the next bit of communication, we'll have until the launch of the game to be between around 80 to 100K wishlists for launch. So yes, it's a good trend. It's still continuing. So, and we see that there is a lot of engagement from the players, and so as I mentioned, the next bit of communication will be the Save & S ound event in October, yes, where we show a next demo of the game. So, and we will gain another round of wishlists for sure. I see another question on the chat, Erika.
Yeah, go ahead.
So the reason we moved Fretless, it's easy. When I joined the company and taking my position, I audited the project. I see that the team was, you know, with their main activity, porting IP, PC console to mobile. It's our expertise. Starting a new vertical, creating new IP is another expertise. The team was not ready yet, so they have this ability to, you know, to see good project potential with Fretless, and we see we have a good reception. But when I audited the project, I see that they have a good team. The team was young, the studio was young.
They needed to have more support, so I hired a publishing director into the company, mobile manager, and more consultants in order to grow the quality and to see the more potential. In order to doing that, we increased a little bit the budget, but the goal was to of course to have the most potential of the game and to increase the quality. What is important also to say that that's why also I said to the team when we hired the publishing director to say, "Okay, let's start with a smaller project, because Fretless will be a bigger one.
Let's see step by step how it goes." Evoland 2 is a niche project, but Fretless will be maybe the next one, so we have to prepare the team for that. All the marketing activities, social media activities, all around the fact that we have to prepare our launch is difficult, and launching a new IP, especially in this market right now, is still difficult. So, that's why I would like to give everything on table for the teams to gain the success with Fretless.
You are popular today, Abrial, because we have another question for you.
Yeah, let's say.
What are the future expectations of the performance of Dead Cells? Have this game reached its peak?
I would say yes, but no. I have some good news, because we see that Dead Cells is still performing well. Of course, it's decreasing because a little bit from year to year, but because we didn't release any updates, and also Motion Twin, which is the IP owner of Dead Cells, has announced publicly that they will finished to live Ops the game. But after 33 updates, and now we announce the Update 34 and 35. These two update was waiting for million of players, will be available on mobile for the end of the year, for Q4. And it has just been announced that the for PC and console, it has been now available. So the time we now finishing the development, so we are happy to announce the new update.
We see that every time we have a new update on Dead Cells, we see a peak of revenue coming, and so I expect a new peak in Q1 and Q2 next year for sure, and even in China. Our Chinese partner is very happy about that because we see that the revenue are stable also in China, so no, it's not just a new start for Dead Cells again.
Hmm. Dead Cells continues to be the golden child.
Yeah.
We have a question here for Stefan. If the TO2, which are the warrants that came with the rights issue in a package, if they are not redeemed, will you need to bring in more capital within six to nine months?
That's not the plan, but it's dependent on the Koban launch, of course.
And then we have another question is, are there plans on acquiring new office premises in Stockholm?
No, there are no plans. We currently sublease an office in Stockholm, which is very cheap, and we're happy about that.
Okay. Can you elaborate on the weak adjusted EBITDA for gaming in this quarter?
Say again?
Can you elaborate on the weak adjusted EBITDA for gaming in this quarter?
Yeah, on 2.8, for the gaming, I think, on the seasonality, I think, Playdigious had a little bit lower quarter in terms of the second quarter compared to last year, and also what we expected a little bit. I think that... So that's the biggest comment, I think, compared to gaming. But also, when it comes to the revenues, it was the hyper casuals, the divestment of hyper casual games, two hyper casual games in Lucky Kat last year, May last year, that we also sort of lost the revenues. But most of that revenues was also cost of goods sales in terms of marketing cost for these hyper casual games, which was not rather profitable or more or less break-even games. That's why we divested them.
We saw a trend for expensive marketing.
Yes. Then we have a question: Can you give a short summary of cash at hand and short-term liabilities, post the rights issue? Only and on a superficial level, obviously, since we can't touch on numbers that have not been communicated. So I don't know, Stefan, if you feel that you can.
I mean, we ended the quarter with SEK 7.6 million, right, in cash. And then I comment also on the fact that we finalized the rights issue, which injected about SEK 10.5 million to add to that SEK 7.6 million.
Will you do a reverse split soon?
We are discussing that with the board, so it's a topic that we're discussing, but not decided yet.
Okay. And then we have: Could you explain again the token sales of SEK 38 million, what it means? The Koban token is the in-game currency, which when it's launched, you will be able to use it as payment in the game. It is also going to be traded on external exchanges, meaning that gamers, us, anyone who's interested, can purchase these tokens just like any other share or bond or fund or something like that. The current status of Koban is that since it isn't yet publicly launched, what we've had is a period of sort of, I guess, pre-investment, you could say.
We've engaged with investors over the course of a number of years, who have invested into our game development, and they've been then given, which I guess you could say the equivalent of a warrant or a stock option, meaning that on the day that we launch, they will then get the Koban, their Kobans in certain investing schemes, and they can vary from depending on if it's a team member or if it's an external investor. So the benefit for us as a company is that we were then given this money ahead of time, so we could support the development of our games, the development of our Koban ecosystem.
The benefit for the investors is, of course, that they came in at a lower price, and on the point of where they're given their Kobans, they will then have made a profit. And also during this time, because of the high engagement that Web3 has, they as holders have been highly engaged in the game development, and they've been able to comment and feedback and so forth. So the 38 million SEK is the total amount of private sales carried out between when we started and up until now. I hope that answers the question. And as far as I can see, we don't have any more questions. Okay, I think that's the last one. Thank you so much, of course, Stefan and Gabriel, for your excellent presentations.
But most of all, thank you so much to our shareholders and other listeners who are joining us today. We appreciate your time. And please see us the next time after we report the third quarter. And stay tuned for more information on upcoming events. See you later!